The nominee to lead the Bank of Korea, Shin Hyun-song, has expressed his support for a central bank digital currency, suggesting that it should be the cornerstone of South Korea's digital monetary system, alongside bank-issued deposit tokens, with stablecoins playing a secondary role. According to Yonhap, Shin stated that he expects central bank digital currencies and deposit tokens to coexist with stablecoins in a mutually supplementary and competitive manner. In his written remarks submitted to parliament, Shin advocated for the introduction of a won-based stablecoin, but stressed that establishing trust in the currency is paramount.
He views stablecoins as useful tools for facilitating the trade of tokenized assets and enabling programmable payments, rather than as a replacement for state-backed currencies. Shin's proposal is in line with the central bank's existing stance that stablecoin issuance should be initiated by regulated banks, citing the need for compliance with anti-money laundering and customer verification regulations.
He also expressed skepticism regarding the potential of blockchain-based coins to enhance foreign exchange efficiency, citing regulatory uncertainty and additional costs. Furthermore, Shin noted that digital assets fall short of fulfilling the core functions of money, including serving as a unit of account, a medium of exchange, and a store of value. The Bank of Korea has warned that privately issued tokens could pose risks to monetary policy and financial stability, emphasizing the need for stringent oversight, including anti-money laundering and customer verification rules.
Shin's remarks come as policymakers debate the extent to which the market should be opened up, with regulators pushing for bank-led models and lawmakers proposing broader frameworks that would allow non-bank issuers under new legislation. Notably, the country's first fully regulated stablecoin, KRW1, was launched in February through a partnership between crypto custody service provider BDACS and Woori Bank.